Australian Credit Fund Investor FAQs

A credit fund is a managed investment scheme that is operated by a fund manager which invests in various asset classes including loans secured by mortgages over real estate property and related investments.

The La Trobe Australian Credit Fund (Credit Fund) uses investors’ money to invest in a range of investments, including loans secured by mortgages. You, as an investor, may receive the investment returns generated by these assets, after the fund manager deducts its fees and expenses of running and operating the Credit Fund.

The La Trobe Australian Credit Fund is Australia’s largest, most recognised credit fund. It has a long history of producing consistent, low volatility income for investors across the market cycle. The manager of the Credit Fund, La Trobe Financial, has over seven decades of experience in credit asset management for institutional and retail investors and draws on these years of experience in managing your investments.

All of the loans in the Credit Fund are secured by a registered mortgage over real property in Australia, with the highest loan to value ratio (LVR) permitted in the Credit Fund being just 80% and most loans being substantially lower than this maximum.

There are no investment entry or investment account set up fees.

See the “Fees & Charges” section of the Product Disclosure Statement (PDS) for further information.

The minimum and maximum investment amounts are:

La Trobe Global Asset Management (LGAM) is a new alternative asset management strategy launched by La Trobe Financial in 2023.

As part of the strategy, La Trobe Financial is bringing global investment products to Australian investors. The first product in the series is the Class A units in the US Private Credit Trust, an unlisted Australian unit trust (offered to wholesale investors only). For more information about the US Private Credit Trust please click here.

Yes, register via our website to access our online investor platform, La Trobe Direct.

La Trobe Direct gives you 24/7 user friendly and secure access to your investment accounts with the ability to review your balances and transactions, as well as make new investments.

Click here to register.

Investors receive electronically (and by post if requested) the following regular reports:

• Monthly Investment Snapshot & Portfolio Metrics Update;
• Investor Activity Statements; and
• Financial Year Income Taxation Statement.

We aim to provide investors with the latest information about the Credit Fund, to help them monitor their investments. You can obtain up-to-date information about the Credit Fund at any time by:

• reading the monthly Credit Fund’s Investment Snapshot & Portfolio Metrics Update, available on our website, by phoning La Trobe Financial or by email;
• making enquiries with La Trobe Financial’s toll free Investor number 1800 818 818; and
• checking in with your La Trobe Financial Authorised Representative.

La Trobe Financial is committed to full transparency and reports all Credit Fund hardship in our monthly Credit Fund Investment Snapshot & Portfolio Metrics Update, which is available on our website.

There are currently seven (7) investment products:

1.  Classic Notice Account – access to your money generally within 2 business days^#;
2.  90 Day Notice Account – access to your money generally within 90 days^#;
3.  6 Month Notice Account – access to your money generally within 180 days^#;
4.  12 Month Term Account – 12 month term investment where investment returns (determined and paid monthly) are variable;
5.  2 Year Account – 2 year term investment where investment returns (determined and paid monthly) are variable;
6.  4 Year Account – 4 year term investing in medium term credit assets and units in the La Trobe US Private Credit Trust, an unlisted Australian unit trust with La Trobe Financial appointed as trustee which may be held directly or indirectly) originated by La Trobe Financial; and
7.  Select Investment Account – where you choose the mortgage and term on a Peer-to-Peer basis.

Please see the PDS and the Target Market Determinations for further details.

^#We will make every endeavour to release your funds after receiving your redemption request: 2 business days for the Classic Notice Account, 90 days for the 90 Day Notice Account, and 180 days for the 6 Month Notice Account. However, we have 12 months under the Fund’s Constitution to fulfill the request. When determining whether to honour your redemption request within the specified timeframes we must consider the Fund’s cash position and the best interests of all investors. While there is a risk of not honouring your redemption request within 2 business days, 90 days, or 180 days, it’s important to note that there has never been a case in the history of the Fund when we have not honoured a redemption request on time due to a lack of liquidity. Withdrawal rights are subject to liquidity and may be delayed or suspended.

Yes, some of our products are rated. We receive regular rating agency reviews to help benefit the financial adviser market to independently conclude on operational activities and benchmark observations. View the latest ratings and awards here.

With our pooled investment accounts (Classic Notice Account, 90 Day Notice Account, 6 Month Notice Account, 12 Month Term Account, 2 Year Account and 4 Year Account) you share the risks with all other investors in that account.

With the Select Investment Account, the investment return cannot be paid to you unless the borrower has made their interest repayment. Consequently, this has a higher level of investment risk than the pooled investment offerings. As a consequence of the loss of cash flow associated with that mortgage being in arrears, a half of the higher rate of interest collected from borrowers by reason of the default, which we call a late payment fee or default rate of interest on the mortgage for late payment, will be paid to you as an Investor (upon collection) to compensate for the lack of timeliness of investment return payments to you.

We maintain the following maximum loan-to-valuation ratios (LVR) for loans made by the 12 Month Term Account:

• where the loan relates to commercial and property development – a LVR of not more than 70% on the basis of the latest ‘as if complete’ valuation within the 12 Month Term Account; and
• in residential loans – a LVR of not more than 75% on the basis of the latest market valuation.

See the PDS for more details.

The interest of an investor in the 12 Month Term Account is as a tenant in common – in the same proportion as the amount the investor has invested to the total amount invested by all investors in the 12 Month Term Account.

Mortgages are generally considered low risk investments because they are backed by real property. In a declining market, the value of the underlying real estate must drop to below the value of the mortgage registered against the property and recovery costs before the investment is at risk. Based on the expected changes in the market, the LVR at the time of the initial loan is set conservatively to reduce the risk of loss.

Funds invested by you are held “in trust” by La Trobe Financial to be used only as permitted by the Fund’s Constitution (copy available here). When payments are received from the borrower, these amounts are also held “in trust” until distributed back to you, the investor. These trust funds and the transactions related to them are regulated by the Corporations Act, are audited annually, and may be subject to review by the Australian Securities and Investments Commission (ASIC) which is responsible for licensing Managed Investments Schemes. The integrity and soundness of the Investment Manager is critical. We are regulated by ASIC and not the Australian Prudential Regulation Authority (APRA). Your investment in the Credit Fund is not a bank deposit.

The PDS at section 9 titled “Investment Risks” outlines other risks and you should read this before investing.

La Trobe Financial generally takes legal action to recover the debt, but in many instances legal action may not be required if a repayment arrangement has been agreed to. If the matter needs to extend to legal action a judgment for possession of property may be required. Once judgment has been entered against the borrower, La Trobe Financial obtains physical possession of the property and will then market the property for sale. Once the property is sold, settlement usually takes place between 30 and 90 days. Our Asset Management team will provide regular written updates to you on the recovery process, and your monthly Investor Statement will detail the amounts owing to you.

La Trobe Financial has been committed to a conservative investment strategy since inception of the Credit Fund. This brings with it a relatively conservative risk framework that underpins our risk management, monitoring and reporting practices. The risk management practices applied are carried out by qualified and experienced staff and overseen by our Chief Risk Officer.

A number of factors influence the investment returns. These include the type and location of the property and the borrower’s credit history. Usually a residential property has a lower interest rate than a commercial or rural property. However this doesn’t mean residential properties are less risky. All loans are dependent on the borrower making their loan repayments.

Investment returns for our pooled accounts (Classic Notice Account, 90 Day Notice Account, 6 Month Notice Account, 12 Month Term Account, 2 Year Account and 4 Year Account) are determined and paid monthly in arrears and will be paid as directed by you either direct to your nominated financial institutions account or reinvested.

Investment returns for Select Investment Accounts will be paid according to the Select Mortgage Investment chosen by you and paid as directed, usually monthly.

The rates of return are reviewed and determined monthly and may increase or decrease each month. The rate of return applicable for any given month is paid at the start of the following month. The rates of return are not guaranteed and are determined by the future revenue of the Credit Fund and may be lower than expected.

An investment in the Credit Fund is not a bank deposit, and investors risk losing some or all of their principle investment. Past performance is not a reliable indicator of future performance. Withdrawal rights are subject to liquidity and may be delayed or suspended.

If you direct us, we will reinvest your investment returns in the Classic Notice Account, 90 Day Notice Account, 6 Month Notice Account, 12 Month Term Account or 2 Year Account. Please note that you can only elect to have income reinvested in the 2 Year Account if you have an investment in that Investment Account.

Your investment returns that are reinvested in the 12 Month Term Account may be withdrawn where a written withdrawal request providing 30 days’ notice has been given (notice requirements are outlined below).

While we expect that some loans will fall into arrears, the Credit Fund aims to continue to distribute an investment return on a monthly basis. It is our intention to pay a consistent return to investors on a monthly basis despite peaks and troughs in receipts of borrowers’ interest payments.

La Trobe Financial does not guarantee investors’ capital. The following order of priority applies to payment of money received following a mortgagee sale in accordance with the PDS and La Trobe Financial’s obligations at law:

1. First, towards payment of liabilities having priority at law to the mortgage investment, for example, Council Rates, GST obligations and liquidator’s fees (if applicable);
2. Secondly, in payment of La Trobe Financial’s or the Investment Manager’s fees, charges and other costs or expenses incurred in the proper performance of its duties (including legal costs on a full indemnity basis);
3. Thirdly, in payment of the investor’s capital investment; and
4. Fourthly, in payment of any interest at the lower rate, and thereafter at the higher rate (if applicable), as it falls due to which the investors are entitled but not yet paid.

You should be aware that GST may be payable on the sale of a property by La Trobe Financial in certain circumstances and this will reduce the funds available for distribution to investors, in accordance with priority number 3 above. Where funds are recovered from the borrower or any third party subsequent to the distribution of proceeds following the sale of the security property, those funds will be distributed to investors according to the priority of their original investment.

The 12 Month Term Account and 2 Year Account are fixed term investments of 12 months and 2 years, respectively. Generally early redemptions from the 12 Month Term Account and 2 Year Account are not permitted. We understand unique circumstances occur and each request for early withdrawal is reviewed and approved subject to the liquidity rules of the Credit Fund and at La Trobe Financial’s discretion. If an early withdrawal is approved, La Trobe Financial may charge an early withdrawal fee. Refer to the PDS for current fees and charges.

Select Investment Account investments are treated as fixed term investments for the duration of the investment identified within the Supplementary Product Disclosure Statement (SPDS). La Trobe Financial is under no obligation to process a withdrawal request during the agreed term of the investment. La Trobe Financial may at its discretion consider requests for withdrawal, only if a substitute investor is available. If a replacement investor is found and the investment manager approves the early withdrawal, La Trobe Financial may charge an early withdrawal fee. Refer to the PDS for current fees and charges.